Question 1

Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.

Accepted Answer

Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.

Question 2

A company that produces boats,which is headquartered in Japan,formed a new company in the United States to avoid paying a tariff on its boats manufactured for the U.S.market.This new company is an example of a subsidiary.

Accepted Answer

To avoid tariffs and quotas,a company might create a subsidiary to produce the product in the foreign country.

Question 3

The Johnson family in Ohio approached Top Builders,an American construction company specializing in new homes,to build their new home.To complete its jobs,Top Builders likes to support small,locally owned American companies that specialize in high-quality products.The use by Top Builders of suppliers outside its company to provide goods and services is known as global outsourcing.

Accepted Answer

Outsourcing,a common practice of many companies,is defined as using suppliers outside the company to provide goods and services.Global outsourcing,or offshoring,is defined as using suppliers outside the United States to provide labor,goods,or services.

Question 4

Amy,the CEO of a large manufacturing organization,knows that many of her competitors have closed their American factories to utilize production facilities in Mexico because labor is cheaper there and they receive special privileges in return for employing Mexican citizens.However,Amy refuses to shift her operations down south,believing that it is important to keep jobs in the U.S. ,despite the cost savings.These manufacturing plants that are allowed to operate in Mexico,with special privileges in return for employing Mexican citizens,are known as internationldoras.

Accepted Answer

Maquiladoras are manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens.

Question 5

To complete the Johnson family's new home in Ohio,Top Builders,an American construction company specializing in new homes,utilized a Swiss company that specializes in fine-quality doors,using the wood of trees from the Alps region.Top's use of a foreign company's products and labor is known as offshoring.

Accepted Answer

Global outsourcing,or offshoring,is defined as using suppliers outside the United States to provide labor,goods,or services.

Question 6

A likely reason for modern outsourcing is the lower cost of labor in another country.

Accepted Answer

Global outsourcing,or offshoring,is defined as using suppliers outside the United States to provide labor,goods,or services.The reason may be that the foreign supplier has resources not available in the United States,or-more likely these days-the supplier's labor is cheaper than American labor.

Question 7

Two managers from an Electronics Mart were talking to Ty,their district manager,about Harriet,the unpopular store manager.Susan,the assistant manager,said,"I believe I speak for other managers and employees when I say that Harriet acts like she knows it all.We all feel that Harriet does not listen to any of us because she always thinks her way is right and does not want to consider any other opinion." Harriet is an example of a geocentric manager;geocentricism is also called parochialism.

Accepted Answer

Ethnocentrism might also be called parochialism,which is a narrow view in which people see things solely through their own perspective.Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective.

Question 8

Adriana,a CEO,is interested in expanding her clothing business globally.She loves the excitement and challenge of forming something new that is totally owned and controlled by her organization,knowing that the risky investment will possibly yield a large return.Adriana's desire to form a firm that is totally owned and controlled by her company is an example of a wholly owned subsidiary.

Accepted Answer

A wholly owned subsidiary is a foreign subsidiary that is totally owned and controlled by an organization.Figure 4.1 shows that a wholly owned subsidiary is the global expansion strategy with the highest risk and investment.

Question 9

A manufacturing facility in a Mexico was unable to afford the products it needs from an American supplier because Mexico's currency dropped dramatically.To acquire the parts needed to produce its products,the Mexican facility bartered with several companies in Texas,offering completed goods for parts.This direct exchange of goods for goods is known as countertrading.

Accepted Answer

Sometimes other countries may wish to import American goods but lack the currency to pay for them.In that case,the exporting U.S.company may resort to countertrading,which is bartering goods for goods.When the Russian ruble plunged in value in 1998,some goods became a better medium of exchange than currency.

Question 10

The study of international management is not important for some people because most individuals and companies are not affected by global companies.

Accepted Answer

Even if in the coming years you never travel to the wider world outside North America the world will assuredly come to you.That,in a nutshell,is why you need to learn about international management.While working for a U.S.company you may have to deal with foreign customers.Or you may have to work with a foreign company in some sort of joint venture.Or while working for an American company you may have to purchase important components,raw materials,or services from a foreign supplier.

Question 11

In 1999,the top exporting nation was the United States,but in 2013 the world's top exporting nation was Japan.

Accepted Answer

The United States was ranked the number one exporter in the world in 1999,but in 2013 the world's top exporting nations were (1)China, (2)Germany,and (3)the United States.

Question 12

Aiden,the purchasing manager for a company that produces high-end,quality medical equipment,is interested in meeting with the management of Diamond Cut,a production facility in the state that specializes in intensive research,precision assembly,and complex technology.Aiden's organization is less likely to offshore the manufacture of its products,and want to meet face-to-face with Diamond Cut because Diamond produces high-end products.

Accepted Answer

Jobs that will remain at home rather than being offshored may share certain traits,regardless of the industry they serve: face-to-face contact,physical contact,or recognizing complex patterns.Making high-end products that require intensive research,precision assembly,and complex technology requiring skilled workers are good candidates for the U.S.labor market,says Eric Spiegel,CEO of the Siemens Corp.Low-end,low-technology products,such as textiles and furniture,will doubtless continue to be offshored.

Question 13

Multinational organizations expand to take advantage of availability of supplies,new markets,and lower labor costs or to avoid tariffs and import quotas.

Accepted Answer

Companies expand internationally to take advantage of availability of supplies,new markets,lower labor costs,access to finance capital,or avoidance of tariffs and import quotas.

Question 14

Jose,the owner of a citrus farm in Mexico,discovers the United States is offering a new larger tariff on the import of Mexican-grown oranges A tariff is a bonus paid to foreign companies by the American government on imported products.

Accepted Answer

Tariffs are fees imposed on imported goods to protect a country's own domestic industries.

Question 15

Countertrading is a decision by an organization to never accept the market price from its suppliers,but to save money by negotiating a lower price.

Accepted Answer

Countertrading is bartering goods for goods.When exporting,a company produces goods domestically and sells them outside the country.

Question 16

Many companies are moving production outside the United States because of the effects of geopolitics,a trend known as deglobalization.

Accepted Answer

While some companies are locating their manufacturing outside the United States,a countertrend,called "deglobalization," is that some companies are moving production back home because long supply chains can be easily affected by the whims of geopolitics and energy prices.

Question 17

Phillip,the global sales manager for a cosmetic company,believes that employees and managers in each of his foreign stores understand best how to handle the personnel and practices in their locations.So when a corporate executive approached Phillip about reprimanding Aki,the Tokyo store manager,for not doing things as corporate dictates,Phillip backed Aki.Phillip feels the home office should leave her alone.Phillip is an example of an ethnocentric manager.

Accepted Answer

Polycentric managers take the view that native managers in the foreign offices best understand native personnel and practices,and so the home office should leave them alone.Ethnocentric managers believe that their native country,culture,language,and behavior are superior to all others.

Question 18

To help American companies,the U.S.government utilizes import quotas,which encourage foreign countries to increase the number of goods exported to the United States.

Accepted Answer

Countries impose import quotas,which are limitations on the numbers of products allowed in,to protect their own domestic industries.

Question 19

Farm Supply has decided to allow a retailer in Canada to utilize the Farm Supply name and a number of valuable business services in return for paying the company a fee and part of its profits.This business arrangement is known as franchising.

Accepted Answer

Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.Toys R Us recently opened a store in Poland using franchising.

Question 20

Greg,a manager at the Rome,Italy,store for an American-owned cell phone company,understands the differences and similarities between American and the Italian customers,customs,culture,and practices.As a result,Greg is very skilled at utilizing either the American or Italian technique that helps him market his products and services to customers in Rome.Greg is an example of a geocentric manager.

Accepted Answer

The successful international manager is geocentric,not ethnocentric or polycentric.Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective.Being an ethnocentric or polycentric manager takes less work.But the payoff for being a geocentric manager can be far greater.

Quiz 4: Global Management: Managing Across Borders

Franchising is a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services.

A company that produces boats,which is headquartered in Japan,formed a new company in the United States to avoid paying a tariff on its boats manufactured for the U.S.market.This new company is an example of a subsidiary.

A likely reason for modern outsourcing is the lower cost of labor in another country.

The study of international management is not important for some people because most individuals and companies are not affected by global companies.

In 1999,the top exporting nation was the United States,but in 2013 the world's top exporting nation was Japan.

Multinational organizations expand to take advantage of availability of supplies,new markets,and lower labor costs or to avoid tariffs and import quotas.

Jose,the owner of a citrus farm in Mexico,discovers the United States is offering a new larger tariff on the import of Mexican-grown oranges A tariff is a bonus paid to foreign companies by the American government on imported products.

Countertrading is a decision by an organization to never accept the market price from its suppliers,but to save money by negotiating a lower price.

Many companies are moving production outside the United States because of the effects of geopolitics,a trend known as deglobalization.

To help American companies,the U.S.government utilizes import quotas,which encourage foreign countries to increase the number of goods exported to the United States.

Farm Supply has decided to allow a retailer in Canada to utilize the Farm Supply name and a number of valuable business services in return for paying the company a fee and part of its profits.This business arrangement is known as franchising.